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America's future is green – not orange

The US is increasingly buying green solutions from Danish companies, and the potential is unlikely to shrink even if Donald Trump reclaims power on 3 November.

By: Christian Dahl Winther, Chief Analyst, EKF

Regardless of whether the US presidential election in November is won by Democrat Joe Biden or Republican Donald Trump, the future looks greener and brighter: the glowing orange coal is on the way out while clean energy is on the rise.

This spells great opportunities for Danish exporters of wind and solar energy solutions.

It's no secret that the current president couldn't care less about the rest of the world's concern about climate change and calls for a global energy transition.

Because Trump scepticism aside, many cities and states take a radically different view

Many of his voters live in areas where the coal and oil industry is still the main source of jobs, and fear is running high of economic collapse if the climate campaigners have their way and get production shut down. This might give the impression that a Trump victory on 3 November would scupper the prospects for Danish companies geared to green solutions.

But this is not necessarily so. Because Trump scepticism aside, many cities and states take a radically different view. US investment in both solar and wind energy is rising steadily, and according to the Bloomberg New Energy research organisation, production capacity is set to increase by around 20 gigawatts in the coming years, mainly in the solar panels sector.

The clean energy expansion is taking off notably in California, but even in a typical oil state like Texas and elsewhere in the Midwest.
The USA is the third-largest importer of Danish goods, exceeded only by Sweden and Germany. In 2019, Danish companies exported just under DKK 76 billion worth of goods to the USA.

Meanwhile – despite racial unrest and Twitter tirades – the US is a stable country, where the risk to Danish exporters is very low. Not that this couldn't change, since in the pharma industry not least, there may be changes in the pipeline. The US has the highest per capita prescription drug expenditure in the world due to the average American's high level of pharmaceuticals consumption, but also a private medical insurance system with no focus on curbing spending. President Trump has repeatedly homed in on high pharmaceuticals prices, and increasing numbers of both Democrats and Republicans are now also decrying the rocketing costs. This sudden consensus might lead to increased pharmaceuticals price regulation, which could impact Danish exporters.

Another factor in the balance is President Trump's mission to renegotiate various trade agreements with the aim of reducing the US trade deficit. Tariffs have already been imposed on steel and aluminium from the EU, and the fear is that these might also extend to European cars. The next developments are believed to be contingent on whether the Trump administration succeeds in striking a US-favourable deal with China. This might be grist to the US mill of cranking up its pressure on the EU. Regardless of whether or not Trump returns to power, it will be interesting to follow what transpires over the coming years.

Given that the American unemployment queues are now longer, consumption by the average American is likely to fall and thereby adversely affect Danish exports of ordinary consumer goods. However, the concern is mainly over the short term outlook – especially in 2020, with GDP projected to fall by 7.3 percent, owing not least to COVID-19, which has also hit hard in the US. Nonetheless, current projections are for growth in GDP of 5.1 percent as early as in 2021, followed by 4.6 percent growth in 2022.

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